We study electromagnetic pulse propagation in an indium tin oxide nanolayer in the linear and nonlinear regimes. We use the constitutive relations to reconstruct the effective dielectric constant of the medium, and show that nonlocal effects induce additional absorption resonances and anisotropic dielectric response: longitudinal and transverse effective dielectric functions are modulated differently along the propagation direction, and display different epsilon-near-zero crossing points with a discrepancy that increases with increasing intensity. We predict that hot carriers induce a dynamic redshift of the plasma frequency and a corresponding translation of the effective nonlinear dispersion curves that can be used to predict and quantify nonlinear refractive index changes as a function of incident laser peak power density. Our results suggest that large, nonlinear refractive index changes can occur without the need for epsilon-near-zero modes to couple with plasmonic resonators. At sufficiently large laser pulse intensities, we predict the onset of optical bistability, while the presence of additional pump absorption resonances that arise from longitudinal oscillations of the free electron gas give way to corresponding resonances in the second and third harmonic spectra. A realistic propagation model is key to unraveling the basic physical mechanisms that play a fundamental role in the dynamics.
